Which agency is responsible for buying residential conventional mortgage loans?

Which agency is responsible for buying residential conventional mortgage loans?

• A. National Loan Corporation
• B. Federal Home Loan Mortgage Corporation
• C. Department of Housing and Urban Development
• D. Federal Reserve Bank

Answer: (B)

The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, plays a pivotal role in the residential mortgage market by purchasing conventional mortgage loans from lenders. This agency was established to enhance the availability of home financing, thereby increasing homeownership opportunities in the United States. When Freddie Mac buys these loans, it indirectly helps facilitate liquidity in the mortgage market, allowing lenders to replenish their funds and continue offering loans to other homebuyers. This process is essential for maintaining a stable mortgage environment, as it reduces the risk for lenders and encourages them to provide more loans to borrowers. In contrast, the other agencies mentioned have different functions. The National Loan Corporation does not exist as a recognized government agency in this context. The Department of Housing and Urban Development (HUD) primarily focuses on overseeing housing programs and policies rather than purchasing loans. The Federal Reserve Bank manages monetary policy and regulates banks but does not directly buy mortgage loans. Thus, the distinctive role of Freddie Mac in the secondary mortgage market confirms its responsibility for buying residential conventional mortgage loans.

The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, plays a pivotal role in the residential mortgage market by purchasing conventional mortgage loans from lenders. This agency was established to enhance the availability of home financing, thereby increasing homeownership opportunities in the United States.

When Freddie Mac buys these loans, it indirectly helps facilitate liquidity in the mortgage market, allowing lenders to replenish their funds and continue offering loans to other homebuyers. This process is essential for maintaining a stable mortgage environment, as it reduces the risk for lenders and encourages them to provide more loans to borrowers.

In contrast, the other agencies mentioned have different functions. The National Loan Corporation does not exist as a recognized government agency in this context. The Department of Housing and Urban Development (HUD) primarily focuses on overseeing housing programs and policies rather than purchasing loans. The Federal Reserve Bank manages monetary policy and regulates banks but does not directly buy mortgage loans. Thus, the distinctive role of Freddie Mac in the secondary mortgage market confirms its responsibility for buying residential conventional mortgage loans.